Easy To Follow Investing Plan for 2025 | Where to Invest ?

Summary

In this video, Pranjal Kamra outlines a financial planning strategy, advising investors on how to make informed decisions. He warns against high-risk investments like ULIPs, cryptocurrencies, penny stocks, and risky bonds, recommending safer options such as term insurance, health insurance, and emergency funds. He emphasizes the importance of discipline in financial planning, including retirement planning with the National Pension Scheme and long-term investment in mutual funds. Pranjal encourages investors to avoid short-term temptations and focus on building wealth steadily through sensible, well-researched financial strategies.

Takeaways

• 😀 Avoid investing in ULIPs (Unit Linked Insurance Plans) as they combine insurance and investment, leading to higher charges. Instead, opt for a separate term plan and invest through mutual funds.
• 😀 🚫 Cryptos can be risky and speculative. If you choose to invest in crypto, only invest a small, forgettable amount of your net worth as part of a high-risk strategy.
• 😀 📉 Penny stocks are often misleading; they may seem cheap, but they usually carry higher risks and could indicate underlying company problems. Focus on long-term investment in stable stocks instead.
• 😀 🛑 Don't rely on lottery tickets or exceptional examples (like Titan). Invest in regular financial planning instead of gambling with your money in unpredictable stocks.
• 😀 📉 Futures and options trading is a risky endeavor with very low success rates. Avoid getting lured into such high-risk games without understanding the chances of loss.
• 😀 ⚠️ Be cautious with low-grade bonds (BBB-rated and below). If you seek low risk, avoid these and consider equity investments instead for better long-term gains.
• 😀 🚫 Peer-to-peer (P2P) lending is risky as you're lending money to unknown individuals who may have been rejected by banks. Avoid these platforms and their inherent risks.
• 😀 💳 Using one or two credit cards judiciously can offer rewards and interest-free periods. However, avoid excessive credit card usage and obsessing over rewards, which could lead to unnecessary debt.
• 😀 🛑 Avoid flashy consumer loans, such as expensive car loans or personal loans for non-essential expenses. Stick to loans that serve genuine purposes like home or education loans.
• 😀 ✅ Plan for your retirement early. Consider using the National Pension Scheme (NPS) for self-employed or private-sector individuals, as it offers a disciplined way to save for the future.

Q & A

What are ULIPs and why should investors avoid them?

ULIPs (Unit Linked Insurance Plans) combine insurance with investment. However, they should be avoided because they are often sold as mutual funds, but they are not mutual funds. The charges are high, and they mix insurance with investment, which is not advisable. Instead, separate term insurance and invest through mutual funds.

Is cryptocurrency a safe investment for regular investors?

Cryptocurrency is a high-risk investment. While it may offer huge gains in rare cases, it is essentially like gambling or betting. For most people, cryptocurrency should not be part of a core financial plan, and only a very small percentage of one's net worth should be invested in it if at all.

Why are penny stocks considered dangerous for investors?

Penny stocks are often seen as attractive due to their low price, but they are highly risky. Many penny stocks represent companies with underlying problems, and investing in them based on the hope they will rise is speculative. It is important to ask why a stock is a penny stock in the first place.

How risky are futures and options in investing?

Futures and options are highly risky and are not recommended for the average investor. Most traders lose money in these markets, and the chances of success are very low. These instruments should not be part of a long-term investment strategy, as they involve speculative risk.

What are risky bonds, and why should they be avoided?

Risky bonds are those with ratings below investment grade, such as BB-rated or B-rated bonds. While they offer higher returns, they come with higher risk, including the possibility of default. It is safer to invest in bonds with higher ratings or to focus on equities for better returns.

What is P2P lending, and why should it be avoided by individual investors?

P2P lending involves lending money to individuals through an online platform, but the risks are high. The platforms are transferring the risk to you because they do not want to take it themselves. Investing in P2P lending is like becoming a bank for high-risk borrowers, which can lead to significant losses.

How should credit cards be used wisely?

Credit cards can be beneficial if used judiciously, paying off the full amount on time to avoid interest. The rewards and interest-free periods can be enjoyed, but having too many cards can lead to unnecessary management and time waste. Avoid becoming obsessed with credit cards or using them excessively.

What is a term plan, and why is it important for financial security?

A term plan is a simple life insurance policy that provides coverage in case of death. It is crucial for financial security, especially for earning members with dependents. A term plan is affordable and ensures that your family is financially secure in case something happens to you.

Why should everyone have health insurance, and how much coverage is ideal?

Health insurance is essential to protect against unexpected medical expenses. It is advisable not to rely solely on corporate insurance policies. Instead, opt for a separate, independent health insurance plan with adequate coverage, ideally around ₹5 lakh for a family of 3-4 people.

What is an emergency fund, and why is it necessary?

An emergency fund is a savings reserve to cover unexpected financial needs, such as job loss or medical emergencies. It is important to have at least six months' worth of living expenses in a liquid, accessible form, like a savings account or a safe liquid fund. This ensures financial stability in case of sudden emergencies.